HomeMy WebLinkAbout01/09/91 MINUTES RA JOINT158
Bakersfield, California, January 9, 1991
Minutes of the Special Joint Meeting of the Council
of the City of Bakersfield and the Central District
Development Agency of the City of Bakersfield, California,
held in the Council Chambers of City Hall, 1501 Truxtun
Avenue, at 5:15 p.m., January 9, 1991.
The meeting was called to order by Mayor Medders.
Mayor Medders announced that Councilmember Edwards
was ill and will not be attending either the Workshop, Closed
Session or Regular Meeting of the City Council this evening.
City Clerk Williams called the roll of the City
Council as follows:
Present:
Absent:
Councilmembers DeMond, Brunni, Peterson (seated at
5:25), McDermott, Salvaggio
Councilmembers Edwards, Smith
City Clerk Williams called the roll of the Central
District Development Agency as follows:
Present:
Absent:
Agency Members Rubin, Ruddell, Araujo, Dunn (seated
at 5:20), Paynter
Agency Member Sceales
CITY COUNCIL/CDDA JOINT WORKSHOP
Economic Development Director Wager gave an oral
presentation regarding the status of the Central District
Development Agency, as follows:
In 1986, the City Council delegated the
responsibility for the implementation of
the Redevelopment Plan to the Central
District Development Agency. The
creation of the CDDA was, given the time,
the most effective way to facilitate the
revitalization of the Downtown. With
this formation, the Agency inherited two
major projects: the need to resolve a
major lawsuit, as well as assuming the
financial obligations previously incurred.
Responding to that challenge, the Agency
first addressed the lawsuit which, after
considerable discussion, was settled. As
is well-known, the two projects the
Agency was entrusted with has met with
some difficulties. Lastly, the Agency
has continued to struggle to meet its
financial obligations while still trying
to implement the revitalization of the
Downtown.
In regards to the two projects the Agency
was involved in, the Agency has
experienced mixed results. The Hotel
Project came to a halt largely because of
the impending failure of what, at the
time, was considered to be one of the
most vigorous savings and loan
institutions. The Agency has fared
remarkably well since the shutdown by
prevailing in a number of legal actions.
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Bakersfield, California, January 9, 1991 - Page 2
The conclusion of those actions has
resulted in the Agency having clear title
to land and improvements whose value
approximate $6,000,000. This has not
come about without cost. Originally, the
Agency invested approximately $2,000,000
in land acquisition. Of late, the Agency
agreed to utilize an additional $2,000,000
to resolve nearly $5,000,000 in claims
filed against the Project. Adding to the
Agency's frustration, nearly $400,000 in
legal costs have been incurred by the
Agency in asserting its position as a
wronged party and resolving the issues of
claims filed by numerous parties.
Fiscal Year 1990-91 holds out a prospect
for improvement on two counts: the first
being a substantial reduction in legal
cost as a result of the Hotel settlement;
perhaps, more importantly, the selection
of a development entity to bring about
the completion of the Hotel. Recently,
the Developer has completed some in-house
studies, and negotiations should begin in
earnest this month. In fact, as of this
morning, an appointment was set for the
Developer for next week. Staff remains
cautiously optimistic that an accord will
be reached between the Developer and the
Agency. If an accord is reached,
construction could resume by Summer, 1991.
In regards to the second project, the
Agency experienced mixed success here.
The City Center Project was indeed
completed on time and per the Owner
Participation Agreement. Unfortunately,
the Developer experienced some financial
difficulties, and the Lender took back
the building. The Lender, U.S. Bancorp,
is in the process of resolving the final
outstanding issues with both the City and
the Agency.
Assuming the responsibility to carry out
these projects to completion has also
meant inheriting the fiscal constraints,
as well. For some time now, there has
been a general awareness that the Agency
would eventually face a cash flow
shortage. Efforts to hold off that point
in time have, so far, succeeded. The
majority of the Agency's revenue is
committed to debt service. It is
anticipated that the Agency will continue
to be able to meet its debt service needs.
Among those debts being repaid are the
following:
Principal and interest payment
to the City Sewer Fund - an
annual payment of $169,000,
which expires in 2000.
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Bakersfield, California, January 9, 1991 - Page 3
Principal and interest payment
for a City-owned parcel at the
Hotel site - annual payment of
$59,000, which expires in 1998.
Principal and interest payment
to Wells Fargo - an annual
payment of $350,000, which
expires in 1999.
Principal and interest payment
for a Tax Allocation Bond -
annual payment of $604,000,
which expires in 2008.
Principal and interest payment
for parking structure at the
Bank of America site - annual
payment of $130,000, which
expires in 1999.
Total Debt Service $1,300,000.
Total Tax Increment Revenue -
$1,400,000.
On a more positive note, in the last year
we have seen some encouraging signs that
the Downtown has stabilized. In fact,
there are indications of a mild resurgence
in the Downtown area. We distributed an
article to the Agency at its Monday
meeting, written by Joe Stevenson, and
included in the Council's folder tonight.
Other things that we've seen happen in
the Downtown, previously unoccupied
buildings have been purchased and have
been put to use: The Pavilion (formerly
the Brock's building) and American Way
(formerly the J C Penney building); the
Kress Building, the new owners have
created new interest in the available
space, and much of the building has been
leased.
Past difficulties with projects and
critical reports from the Grand Jury
have had a positive impact.
The Agency's philosophy on granting
assistance is now predicated on post
facto assistance, meaning only after a
project is in place and generating tax
increment is the assistance granted to
the developer. To an extent, this is
necessary due to the fiscal constraints
that the Agency is faced with, but the
Agency also feels it's essential in
order to reduce all risk to the extent
that it is feasible. Some of the more
recent example of that:
Bakersfield, California, January 9, 1991 - Page 4
Banducci-Walker, where
inducements were offered which
would cause the development of
4.5 Million Dollars of
improvements within the next 5
years. Should that take place,
then the Agency would incur
that obligation and pay the
City out of the tax increment
generated.
The Tegeler Hotel Project -
assistance from the Agency will
be granted only upon completion
of the Project.
And thirdly, we're in the
initial stages of negotiations
with a medium-sized engineering
firm for its office location in
the Project Area. Again,
assistance for off-site
improvements would come only
after the project is completed
and generating tax increment,
and the assistance would be
limited to a percentage of that
tax increment to be generated.
The Agency has been instrumental in the
development of submittal guidelines,
which the Council will find in their
packets.
Urban Design Guidelines - which
were recently adopted by the
Redevelopment Agency;
Revised parking requirements
for the Downtown area contained
within the newly-adopted
Parking Ordinance; and
The final stages of creating a
Master Tree Plan for the
Downtown.
Finally, through an Agency-appointed
citizen panel representing many divergent
interests, a draft revision of the
Redevelopment Element has been completed.
The Executive Director has established an
administrative policy that now requires a
review and sign-off of any CDDA agreement
by the City Attorney's Office, Finance
Department, and the Economic and Community
Development Department prior to any
legislative action.
Also, at his direction, an Administrative
Work Plan for Fiscal Year 1990-91 has been
prepared in order to better guide staff
resources, and I believe the Council will
find that in its packets, and copies of
that have been distributed to the Agency
this evening.
Bakersfield, California, January 9, 1991 - Page 5
Work is also under way by both the Finance,
and Economic and Community Development
Departments to address some medium-term
solutions to the Agency's financial
difficulties. This includes the
disposition of Agency-owned property.
Lastly, efforts have already been initiated
to reduce operating costs by not filling a
position that has become vacant and the
transfer of personnel from Redevelopment to
Planning.
Agency Member Araujo made a brief statement
regarding the need for better communication between the
Agency and the Council, as follows:
In order for the Council to be kept
abreast of the Agency's progress and
potential problems, a closer working
relationship should be arranged.
Regularly scheduled meetings between the
Agency and the Council, open to the
public, would be the most straightforward
way to accomplish this. Communication
between the Agency and the Council should
not be solely the responsibility of staff.
With regard to the need for open, two-way
communication between the Agency and the
public, regularly scheduled Agency
Workshops, open to the public, would do
much to eliminate misunderstandings. For
example, Downtown business people often
ask questions about such matters as the
current disposition of funds which were
once to be allocated for certain programs
later suspended or eliminated, such as
the highly-successful Facade Improvement
Program, which is currently on hold.
Councilmember McDermott stated that this Workshop
was set up at the direction of Councilmember Edwards and,
although Councilmember Edwards was ill this evening, staff
has been asked to tape this Workshop in the event he wishes
to listen to it at a later date. Councilmember McDermott
further stated that, in the past, Council had asked the Urban
Development Committee to stay in communication with the CDDA
by having regularly-scheduled luncheons and requested the
Chairman of that Committee check into resuming the quarterly
luncheons.
Agency Chairperson Rubin stated he wished to echo
the comments regarding the need for closer communication. He
further stated it is an excellent idea to resuscitate the
luncheons, and he will be happy to participate and felt all
the Agency Members would, as well.
Councilmember Salvaggio stated he would like to see
the Facade Improvement Program back on track.
Bakersfield, California, January 9, 1991 - Page 6
Councilmember DeMond urged staff to offer any
existing funds, or when funds do become available, to the
community for facade improvement. Councilmember DeMond
requested staff determine and advise when the Facade
Improvement Program would become available.
ADJOURNMENT
There being no further business to come before the
Council and the Central District Development Agency, Mayor
Medders adjourned the Special Joint Meeting, Council went
into Closed Session, and the Central District Development
Agency went into its Special Meeting at 5:45 p.m.
CHAIRPERSON of the Central District Development
Agency of the City of Bakersfield
ATTEST:
SECRETARY of the Central District Development
Agency of the City of Bakersfield
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